The escalation in the Russia/ Ukraine crisis sent stock prices down making oil prices rise. S&P 500 futures fell 1.6% and Nasdaq 100 futures fell 2.2% from Friday’s close while WTI crude rose 4% to $94.67 a barrel. The scramble for haven assets resurfaced as the yield on 10-year Treasuries dropped six basis points to 1.86% while Gold was at $1,910.92 an ounce, up 0.2%. The U.S. has continued to warn of a possible Russian invasion of Ukraine, a claim the Kremlin has repeatedly denied. Investors are still worried about the uncertainties due to Russia/ Ukraine tensions and continue to watch out for the U.S. monetary-policy path. Fed Governor Michelle Bowman suggested that a half percentage-point increase in rates could be tabled next month if expected readings on inflation come in too high.
European assets whipsawed on Monday as developments on the Russia/Ukraine geopolitical front made a turn for escalation during the session. Bunds had opened weaker while stocks were positive with eurozone February PMIs (composite outperformed 55.8 vs expected 52.7 even as manufacturing underperformed) before reports filtered through that a Biden-Putin summit was not cast in stone as had been expected reversed the earlier moves. Bunds ultimately closed some 1.4bps weaker at 0.206% while stocks remained depressed with the Stoxx 600 shedding 1.30%. 10Y DBR yields trade 5bps lower at 07.45 GMT following increasing geo-political tensions overnight.
The US and UK announced new economic sanctions against Russia after Moscow recognized Donetsk and Lugansk Peoples Republics as independent state and sent military forces there on Monday. Heads of NATO and EU Commission condemned in the strongest possible terms the decision by the Vladimir Putin to recognize two breakaway regions in eastern Ukraine as independent entities. According to Ursula von der Leyen, this step is in violation of international law and Ukraine’s sovereignty and a repudiation of the Minsk process and the Minsk agreements. Such a reaction followed Vladimir Putin’s long-speech by state TV about Donbas and signing a decree recognizing the independence of the LPR and DPR along with agreements on cooperation and friendship. Market’s reaction to this news was strongly negative, with USDRUB spiking towards the 80 level. RUB lost 3.0% to USD closing at 79.75. Russian debt dropped below March 2020 levels; Russia 47’s decreased almost at 5 figures from 102 to 97 lvl. The MICEX fell by 10.5% to 3025 lvl, the RTS dollar index by 13 % to 1200 lvl. On Monday MICEX fell below 3,000 points for the first time since November 2020.
Nigeria’s economy is set to expand by 2.8% going into 2022 as against the 2.9% expansion we witnessed last year as gathered by Bloomberg News survey of 12 economists conducted from Feb. 11 to Feb. 16. Coming into the year 2022, the yields on the Nigerian Sovereign curve has relatively not borne the brunt of rising interest rate when compared to the likes of its West African neighbours Ghana. Holistically, comparing the short end of both curves (taking into comparison the NGERIA 25s vs GHANA 26s) we see a c.20bps decrease in yields of the NGERIA 25s against the GHANA 26s yields that have increased c.296bps–Looking at both opening levels since the start of the year as against closing levels from yesterday. Despite the gains seen in oil between yesterday and today (Yesterday’s vs Today’s opening BRENT; $95.06/bbl vs $99.30/bbl), the continued increase in yields has also been sustained into this morning as we have opened to a relatively weak session in SSA with NGERIA down almost 60pts from its closing levels and that has transcended well into other SSA curves so far.